Cant really rate the algorithm, but I guess it works correctly, assuming you tested it.

One last thing to mention is you could mention to copy the units from the map, but that is not really required, since most people will understand that if it says 'h000' and 'n000' than it most likely is implicit, kind of.

The point of the system is to enable you to check not only if the terrain is walkable, but if it's buildable, pathable for air units, etc.
There are also combinations, the 'colors' are results of things being, for example, both walkable AND buildable.

Now I'm not the best with vJASS but I'm basing this off of what I remember when I was working with pathability before, and I had looked up a few resources.

OMG. I'm so excited to release this update. It's not only much faster due to its new approach (big thanks to PurgeandFire), but it also allows you to check flyability and buildability as well. And it's no longer depending on IsTerrainWalkable library by Vex. It has its own function which is faster than before. Enjoy!!!